Question

What is the purpose of Simulation Analysis in Capital Budgeting?

a.

Identifying proposed investments

b.

Randomly testing various aspects to identify associated risks

c.

Allocating resources for capital projects

d.

Assessing and evaluating proposed investments

Posted under IC 89 Management Accounting

Answer: (b).Randomly testing various aspects to identify associated risks Explanation:Simulation Analysis involves randomly testing various aspects to identify associated risks and make proper analyses.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. What is the purpose of Simulation Analysis in Capital Budgeting?
Add Comment

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What is the first step in Simulation Analysis?

View solution

Q. What does Simulation Analysis involve in terms of values and probability distribution?

View solution

Q. What is the last step in Simulation Analysis?

View solution

Q. What characterizes Replacement Projects?

View solution

Q. Why are Mandatory Investments made?

View solution

Q. What is the purpose of analyzing Mandatory Investments?

View solution

Q. What is the primary aim of Project Diversification?

View solution

Q. What characterizes R&D Projects?

View solution

Q. What is the primary consideration in the Pay-back Method for evaluating a capital project?

View solution

Q. How is the payback period calculated?

View solution

Q. What does a shorter payback period indicate in the Pay-back Method?

View solution

Q. What is the primary advantage of the Pay-back Method?

View solution

Q. What criterion does the Pay-back Method emphasize?

View solution

Q. What is a limitation of the Pay-back Method?

View solution

Q. What is one of the limitations of the Pay-back Method that the discounted payback period aims to overcome?

View solution

Q. What is calculated in the Simple Rate of Return method?

View solution

Q. How is the rate of return calculated in the Rate of Return on Average Investment Method?

View solution

Q. What does a higher rate of return indicate in the Rate of Return methods?

View solution

Q. What is the criterion for accepting a project in the Rate of Return methods?

View solution

Q. What does the Discounted Cash Flow (DCF) Method discount to find the net present value of inflows?

View solution
View All MCQs on IC 89 Management Accounting

Recommended Subjects

Are you eager to expand your knowledge beyond IC 89 Management Accounting? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!

Mass Transfer

Delve into the science of Mass Transfer with our specialized category. Explore...

Engineering Geology

Explore the dynamic field of Engineering Geology with our specialized category. Delve...

Non Verbal Reasoning

Enhance your cognitive abilities with our Non-Verbal Reasoning category. Dive into...

Instrumentation Transducers

Master the art of instrumentation and transducers with our specialized category....

Heat Transfer

Explore the fascinating world of heat transfer with our Heat Transfer category....

Basic Chemical Engineering

Get a solid foundation in Chemical Engineering with our Basic Chemical Engineering...

IC38 Life Insurance Agent Exam

Prepare for success in the Insurance Institute of India (III) IC38 IRDA examination...

Biochemical Engineering

Master the synergy of biology and engineering with our Biochemical Engineering...

Data Interpretation

Master the art of data analysis and interpretation with our Data Interpretation...